The very first thing I concluded is that, to make a sustainable business, the app has to be seen as a marketing expense and the actual business needs to be somewhere else. Trying to make it with an app alone, especially in a niche market, is not going to happen.
Games are even worse, because, by their very nature, they are a boom/bust industry. You survive in one of two ways as an indie: making incredible games and marketing the crap out of them or making a lot of OK games to flatten the boom/bust curves. It sounds like these guys want to do the former, which is awesome, but they've fallen for what I call "arrogant developer syndrome", which is simply that they believe "If you build it great, they will come and throw money at you." Marketing is as important to product development as writing software. You can build software without marketing, but you won't build a product.
(As a side note related to said app/business, if you are in any way involved in startups [including wanting to start one someday], I'm trying find that actual business. I've got a very short survey that I could use feedback on: http://www.surveymonkey.com/s/F7W9P5P )